Renewal 2003 MR Reinsurance Group

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Münchener Rück Munich Re Group

Renewal 2003

MR Reinsurance Group

February, 28

th

₂₀₀₃

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OVERVIEW MARKET VIEW REINSURANCE GROUP BUSINESS UNITS / LoB OUTLOOK

Overview

Market View

Reinsurance Group

Outlook

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Overview

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Over 14% premium increase on renewed business underlines continuing focus on margin growth

Underwriting discipline leads to further portfolio enhancements Continuing hard market

Tight terms & conditions to limit risk

Rate increases often coincide with improved conditions Buying patterns characterised by budget constraints

Highlights

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5 Munich Re

This year again double digit rate increases expected,

notwithstanding major improvements in previous renewal season Drivers of rate improvements are most lines of business,

with casualty in the lead

Reinsurance rate increases on top of primary insurers’ rate increases Ongoing hard market conditions - harder market to come?

Pricing

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Increased retention of primary insurances under proportional and XL

Continuation of introduction of event limits (e.g. nat. cat., workers comp.)

Further limitation of terrorism risks Exclusion of non-compulsory

unlimited covers in motor third party liability (illimité)

Reduction of commission rates in most lines of business

Terms and Conditions

OVERVIEW

Sustained positive effect on portfolio

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Market View

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Investment returns no longer compensate for poor underwriting results Economic outlook remains subdued and constrains the outlook

for the insurance industry

Trend of rising risks and potential losses:

insurance needs to be rethought and repriced in society

Realised risk profiles for assets resulting in revised scenarios Severe investment losses for insurers reduce capacity

Market withdrawals, losses from the past and increased credit risks in the insurance sector further reduce capacity

Technical rates in many markets still not sufficient

Seven Reasons for a Continuing Hard Market

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9 Munich Re

Cycle Management at Munich Re

We analyse

“macro“ level

Global factors, e.g.

- price trends (direct and reinsurance)

- worldwide capacity - competitors behaviour

(strategies)

- prices in ART markets - capital markets perspective - macroeconomic factors

Individual market trends, e.g.

- per regional market (direct and reinsurance)

- per line of business - in facultative business - competitors behaviour in

individual markets

“micro“ level

Value Based Management and Capital Allocation Model

Customised portfolio strategy defined by the operational divisions – per region – per line of business – per client Client segmentation Global cycle view and strategy

If you adhere to profound underwriting you'll outperform the cycle

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Munich Re – The Preferred Reinsurer

When thinking of quality non-life reinsurance companies, which one(s) is / are the best overall?

88 82 41 35 30 28 25 17 0 30 60 90 2002 2000 Munich Re in %

Flaspöhler Customer Research January 2003

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Reinsurance Group

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January Renewal 2003 (Premiums Written)

0 20 40 60 80 100 Total

portfolio Facultative Total treaty Multi year

Total renewable Renewals later January renewals in % 21 79 4 65 100 75 10 REINSURANCE GROUP

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13 Munich Re

Total portfolio in 2002 consisting of 21% facultative business and 79% treaty business

Deducting the 4% multi-year business from the total treaty business we end up with 75% of our total treaty business renewable

10% of total portfolio has later renewal dates (mainly Asia and the Americas)

Overall 65% of our total portfolio is renewable in January

65% of Total Portfolio up for Renewal

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Changes in Premium

0 25 50 75 100 125 Total 2002

renewable Cancelled Renewed

Increase on

renewable New business

Total 2003 est. outcome 16.4 83.6 9 104.5 100 in % 11.9 MR Total REINSURANCE GROUP This represents 14,2% of renewed, thereof 11% rate increase 3,2% share increase

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Business Units /

Lines of Business

Business Units /

Lines of Business

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Focus on property and casualty business

Single digit premium growth shows the restrictive underwriting which is focused on profitability

Renewal in Germany focused on rate increases and improved terms & conditions (e.g. terrorism clause, abolition of illimité coverage)

Overall reduction of the commission ratio by 2 to 3 %-points differing by market

Improvements in terms & conditions through reduction of nat. cat. exposure

Business Units – Europe

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17 Munich Re

Business Units – Asia, Australasia, Africa

Focus on property, casualty and marine business

Balanced premium growth because of economic downturn, political dangers (e.g. Iraq) and terrorism

Terms & conditions improved by the introduction of event limits and changes of exposures (e.g. nat. perils exposure reduced)

Some treaty renewals still outstanding (e.g. Japan as of April 1st)

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Focus on property and casualty

Continued rise of primary and reinsurance rates e.g. due to Sep. 11th

claims and unprofitable underwriting over the prior years Major portfolio enhancement and restructuring enforced Treaty coverages have become more restrictive in nat. cat. Finalised terrorism guideline with specified terrorism budgets

Shift from pro-rata coverages into higher layer excess coverages to meet more restrictive underwriting guidelines

Business Units – American Re

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19 Munich Re

Business Units – Corporate Clients

Double digit premium increases in the range of 10% to 25% achieved with all clients

Majority of treaties renewed on tighter terms and conditions (e.g. exclusion of toxic mould, reduction of terrorism exposure, introduction of event limits) Reinsurance price increases compound with primary price increases

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Focus on aviation, space and credit & bonding business

After very successful renewal 2002 aviation rates are levelling off

Reduced market capacity in space will keep the rates on a risk adequate level

Rate improvements in credit & bonding XL business up to 25% in addition to commission reduction of up to 5% in proportional reinsurance

Additional reduction of limits and coverage (e.g. change from automatic coverage into facultative requests), shortening of payment period for XL installments

Business Units – Special and Financial Risks

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21 Munich Re

Lines of Business – Property – Overview

Pricing:

Substantial rate improvement (20-25%) in primary markets, especially in industrial lines

Working XL reinsurance: further rate increases up to 15% in all property lines

In cat-covers: only slight increases on an already high rating level Proportional reinsurance: besides the increase in original rates the reduction of reinsurance commissions will positively influence the combined ratio

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Lines of Business – Property – Overview

Terms & conditions:

General exclusion of terrorism on risks in excess of €50m

Relief in terrorism exposure due to GAREAT (French terrorism pool), Extremus (German terrorism pool) and TRIA (US terrorism pool)

Extension of scope of cover of Pool Re (UK terrorism pool) In general increase of retentions for all types of treaties Substantial increase in deductibles in primary markets

Limitation of liabilities under contingent business interruption

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23 Munich Re

Lines of Business – Property – January Renewals

(Premiums Written)

0 20 40 60 80 100 Total

portfolio Facultative Total treaty Multi year

Total renewable Renewals later January renewals in % 25 75 69 59 100 6 10

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Lines of Business – Property – Changes in Premium

0 25 50 75 100 125 100 13.5 86.5 8.2 101.2 in % 6.5 Total Property

BUSINESS UNITS / LoB

This represents 7,5% of renewed, thereof 6,6% rate increase 0,9% share increase Total 2002

Increase on

Total 2003 est. outcome

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25 Munich Re

Lines of Business – Casualty – Overview

Pricing:

Substantial rate improvement in primary markets, especially in industrial lines; sometimes by up to 50% and more (e.g. pharmaceuticals, medical malpractice)

XL reinsurance: again significant rate increases in all casualty lines

In personal accident / workers comp. cat. covers increases of up to 100% were necessary and could be achieved

Proportional reinsurance: besides the increase in original rates the

reduction of reinsurance commissions will positively influence the combined ratio

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Terms & conditions:

Abolition of non-compulsory unlimited covers in motor third party liability; further restrictions to follow

Increase of companies retentions under XL and proportional business Further improvements in index clauses (move away from severe inflation clause)

Continuation of introduction of aggregate limits and/or limited number of reinstatements

Under XL treaties substantial reduction of exposures from occupational diseases through introduction of ACOD clause (one man one occurrence)

Lines of Business – Casualty – Overview

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27 Munich Re

Lines of Business – Casualty – January Renewals

(Premiums Written)

0 20 40 60 80 100 Total

portfolio Facultative Total treaty Multi year

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Lines of Business – Casualty – Changes in Premium

0 25 50 75 100 125 100 16.8 12.9 112.3 in % 16.2 Total Casualty 83.2

This represents 19,5% of renewed, thereof 15,3% rate increase 4,2% share increase Total 2002

Increase on

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29 Munich Re

Pricing:

In some segments prices are still not risk adequate Primary rates improved up to 40%

XL: In the third consecutive year substantial improvement of terms. Up to 30% rate increases with significant retention increases

Terms & conditions:

Limitation of terror risks

Reintroduction of refinery exclusion clause (exclusion of on-shore energy risks from off-shore policies)

Exclusion of isolated storage risks (except facultative with special pricing and risk survey in accordance with property standards)

Lines of Business – Marine – Overview

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(Premiums Written)

0 20 40 60 80 100 Total

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31 Munich Re

Lines of Business – Marine – Changes in Premium

0 25 50 75 100 125 100 13.6 3.7 95.9 in % 5.8 Total Marine 86.4

All numbers on 2003 renewals contain estimates This represents 6,7% of renewed, thereof 4,7% rate increase 2,0% share increase Total 2002

Increase on

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Pricing:

General improvements by 5% and more in prices Rate increase in XL up to 25%

Terms & conditions:

Reduction of limits and coverage

Up to 5% reduced commission rate expected due to switch from fixed rates to sliding scales

Capacity:

Shortage mainly in proportional business and special products. For XL enough capacity available

Economic Situation:

Primary insurers have taken measures to meet increasing insolvency rates (e.g. reduction of automatic limits, higher retentions of insured)

Lines of Business – Credit – Overview

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33 Munich Re

0 20 40 60 80 100 Total

Total renewable Renewals later January renewals

Lines of Business – Credit – January Renewals

(Premiums Written)

in %

10 90 88 83

100 2 5

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Lines of Business – Credit – Changes in Premium

0 25 50 75 100 125 100 15.9 8 99.8 Total Credit 84.1 in % 7.7

This represents 9,5% of renewed, thereof 5% rate increase 4,5% share increase Total 2002

Increase on

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35 Munich Re

Lines of Business – Aviation / Space – Overview

Aviation

Fac. / direct market / facultative reinsurance:

Strong rate increases in first 4 months 2002, in 4th _{quarter due to massive}

market capacity we noticed accelerating rate reductions, starting with 10% in October and reaching 30% in December

XL:

Higher market capacity due to newcomers. Price increases by 10%

Increase of strategic co-operation with leading aviation underwriting pool In total premium volume 2003 almost stable

Space (no specific renewal date)

Fewer satellite launches planned in 2003

Reduced market capacity will keep the prices on a risk adequate level

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OVERVIEW MARKET VIEW REINSURANCE GROUP BUSINESS UNITS / LoB OUTLOOK 0 20 40 60 80 100 Total

Total renewable Renewals later January renewals

January Renewals (Premiums Written)

in %

46 54 53 42

100 1 11

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37 Munich Re

Lines of Business – Aviation – Changes in Premium

0 25 50 75 100 125 100 16.9 83.1 7.3 3.3 93.7 Total Aviation in %

All numbers on 2003 renewals contain estimates

This represents 8,8%

of renewed, thereof - 9,1% rate increase

17,9% share increase

Total 2002

Increase on

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39 Munich Re

Outlook

Market to remain firm with further rate increases to be expected where risk adequate pricing not yet achieved… (e.g. casualty, commercial lines)

…or where available capacity is scarce

Firm intention to go for underwriting profit throughout the cycle, even more so as capital markets are weak

OUTLOOK

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Investor Relations Contacts

For information please contact:

Pedro Janeiro Martins Phone: +49 (0) 89 3891 3910 Head of Investor Relations E-mail: pmartins@munichre.com Stefanie Gampe Phone: +49 (0) 89 3891 3910

E-mail: sgampe@munichre.com Ingrid Grunwald Phone: +49 (0) 89 3891 3517

E-mail: igrunwald@munichre.com Christian Jacobi Phone: +49 (0) 89 3891 2376

E-mail: cjacobi@munichre.com Ralf Kleinschroth Phone: +49 (0) 89 3891 4559

E-mail: rkleinschroth@munichre.com Monika Schindler Phone: +49 (0) 89 3891 3901

E-mail: mschindler@munichre.com Fax: +49 (0) 89 3891 9888

E-mail: InvestorRelations@munichre.com Internet: www.munichre.com

Renewal 2003 MR Reinsurance Group

Renewal 2003

MR Reinsurance Group

February, 28

2003

Contents

Overview

Market View

Reinsurance Group

Outlook

Overview

Overview

Highlights

Pricing

Terms and Conditions

Market View

Seven Reasons for a Continuing Hard Market

Cycle Management at Munich Re

Munich Re – The Preferred Reinsurer

Reinsurance Group

January Renewal 2003 (Premiums Written)

65% of Total Portfolio up for Renewal

Changes in Premium

Business Units /

Lines of Business

Business Units /

Business Units /

Lines of Business

Lines of Business

Business Units – Europe

Business Units – Asia, Australasia, Africa

Business Units – American Re

Business Units – Corporate Clients

Business Units – Special and Financial Risks

Lines of Business – Property – Overview

Lines of Business – Property – Overview

Lines of Business – Property – January Renewals

(Premiums Written)

Lines of Business – Property – Changes in Premium

Lines of Business – Casualty – Overview

Lines of Business – Casualty – Overview

Lines of Business – Casualty – January Renewals

(Premiums Written)

Lines of Business – Casualty – Changes in Premium

Lines of Business – Marine – Overview

(Premiums Written)

Lines of Business – Marine – Changes in Premium

Lines of Business – Credit – Overview

Lines of Business – Credit – January Renewals

(Premiums Written)

Lines of Business – Credit – Changes in Premium

Lines of Business – Aviation / Space – Overview

January Renewals (Premiums Written)

Lines of Business – Aviation – Changes in Premium

Outlook

Investor Relations Contacts

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